Introductory Citation

"While many think that crowdsourcing is about cheap labor, there are many crowdsourcing models that are based on tapping a pool of the most talented people in the world, trumping any organization that relies only on their staff."

I understand crowdsourcing as kind of an industrial age, corporatist framing of a cultural phenomenon. There’s human energy being expended here. A company can look at that as either a threat — to their copyrights and intellectual property or as some unwanted form of competition — or, if they see it positively, then they see it as almost this new affinity group population to be exploited as a resource.

Introduction

It refers to the usage of distributed, voluntary collaboration from a wide community of users/participants, used in the context of commercial value generation and innovation. It can be associated with Revenue Sharing strategies.

Please note that when there is a direct connection between production and payment, crowdsourcing then differs from non-reciprocal Peer Production

A related term used in the media field, and not necessarily connnected to commercialization, is User-Generated Content

"crowdsourcing involves paying (often very small amounts of money) for the content produced by crowds of people. This model does not likely lead to exceptional content by passionate people, but rather acceptable content by people motivated largely by money. This type of content, I believe, does not support the readership ratios seen in Wikipedia and digg, and you can verify this by visiting some sites that are known to crowdsource.

"the basic idea is to tap into the collective intelligence of the public at large to complete business-related tasks that a company would normally either perform itself or outsource to a third-party provider. Yet free labor is only a narrow part of crowdsourcing's appeal. More importantly, it enables managers to expand the size of their talent pool while also gaining deeper insight into what customers really want."
(http://www.bnet.com/2403-13068_23-52961.html)

4. Ross Dawson:

"The term crowdsourcing, coined by journalist and author Jeff Howe in 2006, has helped us
to frame the concept of using crowds to get work done. Implicit in the idea of crowdsourcing is the ability to create value that transcends individual contributions, crystallizing collective
insights through structured aggregation.
For example competitions, prediction markets, idea filtering, and content rating are all mechanisms
by which collective contributions can create better outcomes than individuals or small groups."
(Getting Results from Crowds)

Description

Katarina Stanoevska-Slabeva:

"The term crowdsourcing was introduced by Howe (2006) in order to denote the new phenomena of outsourcing to the crowd. Howe (2006) provided also the very first definition of crowdsourcing as follows: “… crowdsourcing represents the act of a company or institution taking a function once performed by employees and outsourcing it to an undefined and generally large network of people in the form of an open call. This can take the form of peer production when the job is performed collaboratively, but is also often undertaken by sole individuals. The crucial prerequisite is the use of the open call format in the wide network of potential laborers.”

More recently in his blog, Howe (2008, 2009) consolidated the definition in the following form:

· “The white paper version: crowdsourcing is the act of taking a job traditionally performed by a designed agent (usually an employee) and outsourcing it to an undefined, generally large group of people in the form of an open call.”

· “The sound bite version: The application of open source principals to fields outside of software.”

Based on the original definition of Howe (2006) other authors provide extended definitions that concretize the generic terms used by Howe. For example, (Gassmann et. al. 2010), specify the tasks that are sourced from the crowd as being mostly knowledge generating and problem-solving tasks, but also repetitive tasks. They furthermore, concretize that the open call is supported through a Website.

Both definitions point to the distinguishing features of crowdsourcing:

· It is initiated and coordinated by a company that outsources an existing task or has a problem that needs a solution.

· It is directed to the crowd and not to companies and individual users.

· The usual way to initiate crowdsourcing is through an open call over the Internet.

The fourfold typology of Emma Johnson

The first type assumes that the masses are smarter than individuals. Spiceworks, an Austin, Texas-based software firm, built a free application that helps IT managers of small businesses manage all their software and hardware. Integral to the product is a feature that invites users to comment on its various components and vote on others' suggestions. The two-and-a-half year-old Spiceworks now has 500,000 users and the software is now in its 10th version--with revenue generated by advertising.

Make sure you listen to the feedback you receive. Spiceworks CEO Scott Abel said when they started out, it was tough to take seriously comments that contradicted years of experience and heaps of market research. "They're telling us the way things are in the real working world, and we were reverting to our old market research ways," he says. "Today customers expect to be listened to--and if they're not, they're going elsewhere."

The second type, crowdcreation, has been successfully used by companies including Threadless and 99 Designs, a site on which those in need of logo, business card or website design can post an assignment and fee, and designers submit designs for consideration. The contest sponsor then chooses one design and awards the fee. Mackenzie of Gradigio used 99 Designs and other crowdcreation sites.

"The big advantage was that we got a broad range of designs right up front," Mackenzie says. "Traditionally, you work with one designer, and you never know what you're going to get."

Make sure that you pay appropriately. Many of those who participate in this form of crowdsourcing are professional scientists, designers and other professionals. Free publicity and an ego boost are not adequate enough compensation to attract top minds.

Be prepared for an avalanche of information by creating an in-house mechanism to filter and sort information.

Voting

The third type, voting, collects public sentiment by asking individuals to give feedback on an existing idea or product--in the case of Spiceworks, software users vote on peers' improvement ideas, while TripAdvisor aggregates travelers' votes on hotels and cruises.

Use it as free market research. Take advantage of the comments and ratings by making suggested changes to your business.

Respond. In the case of review sites, log in to the sites as a representative of your business and send private messages to those making mistakes. Be careful about posting public replies, as that can have a shouting down effect that makes others afraid to comment if they fear they might receive a snarky reply from the business.

Encourage customers to post comments and reviews through messages on marketing material.

The fourth type, crowdfunding, refers to the public's willingness to finance projects they believe in: lending money to a microfinancing project, funding an independent film, sponsoring a piece of journalism, or the takeover of a soccer team, in the case of MyFootballClub's collective purchase of England's Ebbsfleet United Football Club for 700,000 in 2007.

Be transparent. People want to know where their money is going.

Show something for it. Whether it's a profit from an investment, or a meaningful story about how donations helped someone in need, show users results."
(http://www.msnbc.msn.com/id/29549600/)

Ross Dawson's six-fold typology

1. Distributed innovation platforms: "They find more than half the people that solve the challenges on Innocentive and these other distributed innovation platforms already know the answer. So why should they solve that problem again when they can find someone else who already knows the answer?"

2. Idea platforms: "These sometimes go under the guise of idea management software, but these are ones where people inside organisations – often – submit ideas or proposals for cost savings, or new products, or new services, or process efficiencies, and then they collectively assess and rate and vote on and select and evolve and refine and build on those ideas to become the innovation that will drive that organisation forward."

3. Innovation prizes: "Anybody anywhere can enter their own projects and ideas, others can vote on them and build on them and use the wisdom of the crowd to make them more effective, and from all of those submissions somebody wins a quarter of a million dollar prize."

4. Content markets: Threadless and Red Bubble are mentioned.

5. Prediction markets: "For enterprise software companies it is notoriously difficult to forecast sales. For many reasons, the sales pipeline that is put into CRM systems is often inaccurate. However, if you then ask the salespeople to predict what the sales are going to be for that quarter and you aggregate all of their opinions, you can get a far more accurate view of what the actual sales are going to be."

"the term “crowd” can mean a large group of people (unbounded crowdsourcing) or perhaps a specific group (bounded crowdsourcing). Unbounded crowdsourcing implies that the identity of individuals reporting the information is unknown whereas bounded crowdsourcing would describe a known group of individuals supplying information.

The term “allsourcing” represents a combination of bounded and unbounded crowdsourcing coupled with new “sourcing” technologies. An allsourcing approach would combined information supplied by known/official sources and unknown/unofficial sources using the Web, e-mail, SMS, Twitter, Flickr, YouTube etc. I think the future of crowdsourcing is allsourcing because allsourcing combines the strengths of both bounded and unbounded approaches while reducing the constraints inherent to each individual approach.

Let me explain. One main important advantage of unbounded crowdsourcing is the ability to collect information from unofficial sources. I consider this an advantage over bounded crowdsourcing since more information can be collected this way. The challenge of course is how to verify the validity of said information. Verifying information is by no means a new process, but unbounded crowdsourcing has the potential to generate a lot more information than bounded crowdsourcing since the former does not censor unofficial content. This presents a challenge.

At the same time, bounded crowdsourcing has the advantage of yielding reliable information since the reports are produced by known/official sources. However, bounded crowdsourcing is constrained to a relatively small number of individuals doing the reporting. Obviously, these individuals cannot be everywhere at the same time. But if we combined bounded and unbounded crowdsourcing, we would see an increase in (1) overall reporting, and (2) in the ability to validate reports from unknown sources.

The increased ability to validate information is due to the fact that official and unofficial sources can be triangulated when using an allsourcing approach. Given that official sources are considered trusted sources, any reports from unofficial sources that match official reports can be considered more reliable along with their associated sources. And so the combined allsourcing approach in effect enables the identification of new reliable sources even if the identify of these sources remains unknown.

""Social production crowd": consists of a large group of individuals who lend their distinct talents to the creation of some product like Wikipedia or Linux.

"Averaging crowd": acts essentially as a survey group, providing an average judgment about some complex matter that, in some cases, is more accurate than the judgment of any one individual (the crowd behind prediction markets like the Iowa Electronic Markets, not to mention the stock market and other financial exchanges).

"Data mine crowd": a large group that, through its actions but usually without the explicit knowledge of its members, produces a set of behavioral data that can be collected and analyzed in order to gain insight into behavioral or market patterns (the crowd that, for instance, feeds Google's search algorithm and Amazon's recommendation system).

"Networking crowd": a group that trades information through a shared communication system such as the phone network or Facebook or Twitter.

Updates

Clay Shirky, who is also participating in the discussion, suggested a fifth crowd type for this list:

"Transactional crowd": a group used to instigate and coordinate what are mainly or solely point-to-point transactions, such as the type of crowd gathered by Match.com, eBay, Innocentive, LinkedIn and similar services. (I would think that contests like the Netflix Prize also fall into this category.)"

Resource Crowd, "which is represented best by crowdfunding platforms such as Kickstarter, Kiva, and IndieGoGo. These platforms aggregate small amounts of money to accomplish a fundraising goal to complete a project. They allow for participation in the funding of projects that might be far out of reach for the average contributor while also providing the funding necessary for a producer that may not have been able to raise funds before such a platform. The power is in the aggregation of small contributions by a large crowd."
(http://coinnovative.com/crowds-come-in-many-flavors/)

"According to Belsky and Kalmikoff, the crowdsourcing definition needs to evolve, especially beyond the common misconception that crowdsourcing means access only to free labor. They mention three business models:

1) Crowdsource wisdom (or knowledge/expertise/skill), as with Wikipedia.
2) Crowdsource labor, as with Amazon’s Mechanical Turk, or traditional spec contests.
3) Crowdsource both wisdom and labor, as with Digg or Threadless. Keep the community active in the business."
(http://weblogsky.com/2010/03/23/community-vs-crowdsourcing/)

Areas of Application

What can be crowdsourced?

Katarina Stanoevska-Slabeva:

An interesting question is what at all is crowdsourcable? Is any task or problem
suitable for crowdsourcing? Or phrased in another way, for which tasks can
companies expect a successful implementation of crowdsourcing? According to
(Schenk & Guittard 2011) in general crowdsourcing is a priori not relevant for
production tasks. They rather consider it to be relevant “… to perform information
on knowledge related tasks involving low fixed equipment costs. In general,
crowdsourcing makes it possible to mobilize competences and expertise which are
distributed among the crowd. Competence generally refers to the ability of an individual to
achieve a set of tasks.” (Schenk & Guittard 2011).

(Gassman et. al. 2010) list in their definition three types of tasks that are
subject to crowdsourcing: problem solving, idea generation and repetitive tasks.
However they do not describe the suggested types of task in more detail. A more
detailed exploration of the suitable tasks for crowdsourcing is provided by
(Schenk & Guittard 2011). According to them, crowdsourcable tasks can be
classified based on the required competences of the individuals in the crowd into
three types: simple, complex and creative tasks.
(http://berlinsymposium.org/sites/berlinsymposium.org/files/crowdsourcingenabledinnovation.pdf)

Areas of Application

Katarina Stanoevska-Slabeva:

"Crowdsourcing is spreading among all
industries and there is a growing body of literature describing case studies and
crowdsourcing projects in various industries: for example, in the film industry
(Geisler, Willard et al. 2011), in the creative industries (Berthon, Pitt et al. 2008), in
retail (Dubach et al. 2011), (Friesike et al. 2010), in high tech industries (Bjelland &
Wood, 2008)."
(http://berlinsymposium.org/sites/berlinsymposium.org/files/crowdsourcingenabledinnovation.pdf)

Science

An emerging application field of crowdsourcing is also science (see Howe
2006). Several published case studies show that, data collection and analysis tasks
in different scientific disciplines can be outsourced to the crowd (Dickinson,
Zuckerberg et al. 2010). This new trend is called ‘Citizen Science’. For example,
users have proven to provide valuable contributions in the analysis of satellite
pictures with high efficiency (Fritz & McCallum et al. 2009), (Viotti et al. 2010).

Government

Meanwhile, crowdsourcing is applied in public hearings as well. (Brabham
2009) describes the application of crowdsourcing by the German Enquete
Kommission des Deutschen Bundestages Internet und Gesellschaft. Another
emerging application is also crisis management (Goodchild and Glennon 2010;
Zook et al. 2010)."

Geography

"There is a growing body of literature that describes crowdsourcing in
different industries and applications. A considerable number of articles describe
the application of crowdsourcing to the collection of geographic information. For
example the contribution of the crowd to collect and aggregate real world data
and to aggregate it in a online map system such as Openstreetmap, has proven
very helpful to quickly create a critical mass of such information (Haklay & Weber
2008)."

Typology of crowdsourcable tasks

Taking a project and breaking it into tiny bits as seen on Amazon’s Mechanical Turk (“the online marketplace for work.”). Each crowd worker can only see his little bit of the project. You could hire one person to label 1,000 photos or hire 1,000 people to each label 1 photo.

Similar to microtasks, however, workers can see more, if not all, of the project and can get involved with any portions they are knowledgeable in. This form is most common with solving complex problems such as the X-Prize or seeking out a better recommendation algorithm for Netflix.

Crowdfunding -

Getting a crowd to help fund your cause or project. It’s unique because you set a monetary goal and deadline and you must get fully funded by your deadline or you’ll get nothing.

Simple Crowdsourcing Tasks

Katarina Stanoevska-Slabeva:

"According to (Schenk & Guittard 2011), simple tasks are easy to
describe and do not require a high cognitive effort and expertise to be understood
by a broad, anonymous mass of individuals. Moreover, their completion requires
a relatively low involvement from individuals. When simple tasks are concerned,
the added value of crowdsourcing does not stem from individual abilities but
from the low cost realization of tasks on a large scale. Therefore, financial
incentives in crowdsourcing of simple tasks do not go beyond micro payments.

Complex Crowdsourcing Tasks

Katarina Stanoevska-Slabeva:

"According to Cambell (1988), complex tasks are characterized by
the following features: multiple potential outcomes, multiple potential solution
path and presence of uncertainty. Their understanding and performance requires
special expertise, problem solving abilities and involves knowledge intensive
activities. According to (Schenk & Guittard 2011), the notion of scale does not
enter into account (as opposed to simple tasks crowdsourcing), but the firm facing
an unsolved complex problem hopes to benefit from expertise and problem
solving skills of individuals within the crowd.

Crowdsourcing of complex tasks only makes sense when the required
expertise and skills are distributed among the anonymous individuals of the
participating crowd. Thus, the required expertise and the relevant incentive
schemes are typically problem-specific. This kind of crowdsourcing typically
involves a higher remuneration. Complex tasks are related to new product
development in innovation projects where the problem solving can be regarded as
a complex process.

Creative Crowdsourcing Tasks

Katarina Stanoevska-Slabeva:

"Creative tasks are where creativity and uniqueness have the
highest priority. Typical examples of creative tasks are the design of logos or
similar marketing material. The main goal of a company crowdsourcing creative
tasks is not to have a problem solved but to rather benefit from the creative power
of the interdisciplinary crowd. (Schenk & Guittard 2011) suggest that regarding
creative tasks incentives or participants can be very heterogeneous, ranging from
monetary driven to passion-driven involvement. As a matter of fact, observation
of crowdsourcing platforms for creative tasks indicate that remuneration
associated with crowdsourcing of creative tasks is of an intermediate amount,
usually of a few hundred dollars (Brabham 2008, 2009).
At least one of the above described types of tasks or even all three types can be
identified in many industries."
(http://berlinsymposium.org/sites/berlinsymposium.org/files/crowdsourcingenabledinnovation.pdf)

Players Involved in the Crowdsourcing Process

Katarina Stanoevska-Slabeva:

"The two main players in crowdsourcing are on the one side companies, who
provide the problem that needs to be crowdsourced and users, i.e. the crowd, the
individual participants that provide the solutions. As a third player, there are also
intermediaries who enable the process of crowdsourcing by providing specific
platforms and services for companies and for the users.

Company-based crowdsourcing

"The companies typically provide the problem, which is outsourced to the crowd.

Even though most crowdsourcing initiatives are directed towards an unknown crowd,
big globally active companies can apply crowdsourcing also within the company
and direct it to employees. With other words, global enterprises have crowds of
employees at their disposal. Involving everybody from the executive level to the
operational level represents a new form of expertise sharing and competitive
intelligence that encourages a type of informality helping to reduce existing or
perceived barriers, hierarchies and distances.

Good examples are the Lufthansa wiki and Wal Mart Blog, both calling for ideas to reduce energy consume.
In order for a company to be able to use crowdsourcing it has to have an
open innovation culture open for extant contributions into the own innovation
process. Another important aspect of the companies as a player in crowdsourcing
is also their willingness to accept the solutions as a result of the crowd activities.

Companies can apply crowdsourcing in two ways:

1) As an ongoing activity, or

2) as single activities that are initiated once or from time to time.

Examples for ongoing activities are Tschibo (Friesike et al. 2010), Starbucks and
others. A successful example of a single crowdsourcing activity is the idea
sourcing for the kiosk of the future of the company Valora Retail (Dubach et. al.
2011). Permanent crowdsourcing activities are typically supported by an own
platform that is set up and managed by the company itself, while single activities
are rather executed in cooperation with intermediaries."

Intermediary crowdsourcing platforms

"The second player which intermediates between the companies and the
crowd are specific intermediary platforms (see also Füller et. al. 2010). Examples
of such intermediary platforms are InnoCentive (Lohse 2010), Jovoto in Germany,
Atizo (Hirsing & Hirschmann 2010) and similar platforms. Intermediaries provide
the platform where companies can place their requirements while users can
provide their solutions. Depending on the type of the problem, the intermediaries
provide different kind of support, starting from helping the company to describe
the problem to different possibilities for the crowd to contribute. One of the most
important services of intermediaries regarding the crowd is also assuring that
relevant participants can contribute to a specific problem of a company. An
example in this context is Jovoto, a platform in Germany, which cultivates a crowd
of designers and other creative users and by specializing in this area, provide the
guarantee that the right crowd with right qualifications and background will
participate in the crowdsourcing endeavor. At the same time, the platform
provides the necessary tools and instruments for the users in order to enable an
efficient participation. This basically means registration possibilities, then search
for requests by companies, different kind of design tools for contributions, then
different possibilities for communication among the crowd, evaluation of content
and similar. With this, the intermediaries play an important role, in particular
providing opportunities for crowdsourcing also to companies that don't embrace
this as a continuous process but from time to time use it in order to solve very
specific problems. Some companies have created their own platform as for
example Migipedia, the crowdsourcing platform of the retailer Migros in
Switzerland."

Criteria for choosing different platforms

Most marketplaces are general in nature and cover all kinds of jobs such as programming, marketing, administration, and design. There are some that are particularly strong in areas such as web development, or may be dedicated to one type of work. Usually it is worth starting off on a general marketplace.

Reach

Some marketplaces have a strong geographical bias, for example featuring more US-based providers or being focused on a specific country. Some of the marketplaces provide an analysis of the location of their registered providers so you can make comparisons.

Features

There are a variety of useful features on each platform which can help you operationally. These include a variety of collaboration and monitoring tools, team rooms, and easy payment of providers. All of the platforms are consistently adding more useful features so check the latest.

Charging model

The fees from the marketplaces are generally similar – between 7 and 10% on each transaction – but some provide different models for frequent users.

Hourly or fixed fee model

Marketplaces usually handle both types of jobs, but some have more developed features for hourly payments.

Recommendations

Speak to other users if you can. Personal recommendations and experiences will give you direct insights.

The crowd

"The third and most important player in crowdsourcing is the crowd. In the
literature the need to attract the right crowd has been stressed as one important
key success factor (see for example Howe 2006). For example in case of
crowdsourcing of design tasks, a higher potential for getting interesting results is
by having a high number of representatives which have a creative background
(see also Howe 2006). In this context one important role is played also by
intermediaries that are able to attract crowds with specific background. See for
example: Jovoto.com a crowdsourcing platform for designers.

Further aspects that are considered as important and related to the users are:

· Are the members of the crowd known to each other and can they see each
other's contributions? For some types of crowdsourcing as for example
prediction or information market, the analysis of the user behavior has
shown that the results are better if members of the crowd don't know each
other and cannot see the contributions of others’ (see Howe 2006).

The Crowdsourcing Process

Katarina Stanoevska-Slabeva:

"Existing literature delivers various attempts to give an overview of
crowdsourcing related processes identifying and analysing the underlying
characteristics.

Malone et al. (2010) adopted a biological metaphor determining
the genome of collective intelligence systems as the combination of building
blocks he refers to as genes. Thus, he delivers an instrument to characterize real
examples.

Geiger et al. (2011) developed a taxonomy framework of
crowdsourcing partitioning the process in five phases from the preselection of
contribution to the remuneration. Different combinations of process
characteristics describe single different crowdsourcing examples.

Before the company can start with the specific crowdsourcing processes, a
strategic decision has to be taken to crowdsource or not. Companies have to
evaluate if crowdsourcing is suitable for identified tasks and problems and if it
can be integrated in their existing innovation as well as research and development
processes.

In case a positive decision is taken in favor of crowdsourcing, further
aspects that need to be clarified are as follows:

1. What are the tasks and problems that crowdsourcing is going to be applied
for and is crowdsourcing going to be an ongoing activity or just single
projects from time to time?

Five Processes

"According to (Gassman et. al. 2010), the specific activities in the five
processes phases of crowdsourcing can be summarized as follows:

Preparation

· In the preparation phase, the problem or task is identified that is going to
be crowdsourced. Furthermore, necessary contracts with intermediaries are
defined.

Initiation

· In the initiation phase of the crowdsourcing process, all preparation
activities take place. The concrete wording of the description of the task or
problem is defined (see for example Dubach et. al. 2011), the evaluation
criteria and procedures are selected, the online publication is prepared and
eventually a crowdsourcing platform is developed and set up, and further
awareness creating activity are identified and prepared.

Execution

· In the execution phase the requests by the company is published and the
crowd provides their solution proposals. The company might provide
support in form of: clarification, answers to participants' questions and
other kind of support to the participating individuals (see for example
Dubach et. al. 2011). In this phase, a critical success factor is also the
prevention of malfunction and misuse of the platform. Furthermore, an
intensive quality control is necessary (see for example O'Neil 2010, and
Giles 2005).

Evaluation

· After all contributions are collected, they are assessed and evaluated by the
company in the evaluation phase. Depending on the number of
contributions, this can be a resource and zime consuming process. Thus,
the availability of sufficient resources inb the company is a critical success
factor (Dubach et. al. 2011). The evaluation phase ends with the selection of
the winning contribution of the crowd and the remuneration of the
winners.

Status

Trend Update 2011

The bigger your crowd doesn’t necessarily mean better output when it comes to crowdsourcing. This has been made apparent with the early days of crowdsourcing design sites. A design contest yielding 1,000 designs can become simply unmanageable. If you offer a prize large enough, any monkey with a crayon could contribute. I’m not saying a large crowd produces bad results, I’m simply stating there will be bad among the good. Luckily, there are almost always a lot of great designs, but it takes extra time to sift out the bad.

Sites like Genius Rocket have begun shifting to a curated crowd model. Anyone can request to join their crowd, however, they must prove they’re talented before being able to participate in some projects, or even at all. LogoTournament has been silently curating their crowd since the early days.

2) Quality Improvements

As microtasking gains in adoption, more crowdsourcing platforms are seeing success with adding an extra level of quality control on top of the basic input – output model made popular by MTurk. If you’ve used MTurk, you’re fully aware the results you get may be less than correct. Sites like Serv.io & Microtask have added extra redundancy and QA checks to ensure high levels of accuracy. If a client requests it, Serv.io can maintain perfect accuracy when needed. As this option becomes more available, people will be demanding 99.9%-100% accuracy, considering it doesn’t incur a lot of extra expense.

3) The Standardization of Crowdsourcing

As it’s been pointed out, crowdsourcing is not an industry, it’s currently an undefined space. The current leaders in crowdsourcing are working to define this space and standardize as much as we can. Groups like the Crowdsortium are for players within crowdsourcing to discuss what’s going on. Daily Crowdsource, along with David Alan Grier, are leading the pack towards standardization. Grier has been pushing for a trade association for quite some time, and recently has begun publicly discussing it. Daily Crowdsource, Grier, and other leaders are working to define the official taxonomy of crowdsourcing. All these recent motions are to help standardize crowdsourcing in order to ensure a healthy future.

4) Corporate Acceptance

Crowdsourcing isn’t just a fad for early adopters. In fact, several Fortune 100 corporations have taken a big step into crowdsourcing. General Electric is leading the charge with multiple million dollar open innovation projects. Others like General Motors, Procter & Gamble, and PepsiCo continue to execute crowdsourcing projects (not just one-off publicity stunts). Amazon even built one of the largest
crowdsourcing platforms. It’s not often a new process is adopted so quickly by large corporations, but this will make it easier for other Fortune 100 corporations to begin crowdsourcing, which will trickle down to smaller corporations.

5) Early Adoption

Although you may be familiar with the term, crowdsourcing is still in the early adoption phase. A very small percentage of people are familiar with everything crowdsourcing can do. Sure, any tech geek can name 99designs, but can you list 10 other uses of crowdsourcing? Were you aware you could build a car, stress test your website, or volunteer your “waiting in line” minutes to a charity all with the help of crowdsourcing?"
(http://www.businessesgrow.com/2011/08/31/the-top-five-crowdsourcing-mega-trends/)

Swarm of Angels

"This British open source film project takes on Hollywood's traditional business model, aiming to create cult cinema for the digital age. Subscribers—the "angel" investors that "swarm" to create the site's name—pay roughly $50 (£25) each to join. The site aims to draw 50,000 angels to create a film with a $1.8 million budget. Eventually, the community will vote to decide which film will be made."
(http://www.businessweek.com/innovate/content/jan2007/id20070118_768179.htm)

CafePress

"This Foster City (Calif.)-based online retailer lets members create, buy, and sell merchandise. Entrepreneurs Fred Durham and Maheesh Jain founded the site in 1999 to let members—the site reports 2.5 million—transform their artwork and ideas into new products and sell them through an online storefront with no up-front costs or inventory to manage. Members can also personalize their own gifts by adding touches to one of 80 available products. CafePress.com sets a base price on products and takes care of printing, packaging, processing payments, and customer service; sellers decide how much to charge for their products."
(http://www.businessweek.com/innovate/content/jan2007/id20070118_768179.htm)

Crowdsourcing Platforms

"This French startup plans to use crowds to develop and bring to market tangible, inexpensive, electronic devices such as CD players, joysticks for video games, and Web cams. The community will handle all aspects of the product cycle—its design, features, technical specifications, even post-purchase customer support."
(http://www.businessweek.com/innovate/content/jan2007/id20070118_768179.htm)

Freelancer

Freelancer was founded in Sweden as getafreelancer.com in 2004. I first wrote about it in 2005 in an overview of the space. For many years it was the dominant online services exchange in Europe, and one of the top three globally. In May 2009 it was bought by Australian company Ignition Networks, which also acquired the domain Freelancer.com. The company is run by veteran tech entrepreneur Matt Barrie, who most recently founded and ran specialty processor firm Sensory Networks Inc.

99designs

99designs has clients set a design brief and budget, and then provide feedback to designers during the design phase, ultimately selecting a winner who is awarded the full budget. It has been very successful though its model has many detractors in the design community. I wrote a post titled 9 practical steps to getting great outsourced design on 99designs reflecting on my experiences using the site.

DesignCrowd

DesignCrowd began life as DesignBay, using a similar prize-driven model to 99designs. Late last year it acquired the US company DesignCrowd and adopted its name. DesignCrowd is using more nuanced approaches to awarding prizes, including giving second place prizes and participation payments.

More examples

"YourEncore, for example, allows companies to find and hire retired scientists for one-off assignments. NineSigma is an online marketplace for innovations, matching seeker companies with solvers in a marketplace similar to InnoCentive."

Netflix, the online video rental service, uses crowdsourcing techniques to improve the software algorithms used to offer customer video recommendations. The team or individual that achieves key software goals will receive $1 million.

Eli Lily and DuPont have tapped online networks of researchers and technical experts, awarding cash prizes to people who can solve vexing R&D problems.

Cambrian House lets the public submit ideas for software products, vote on them, and collect royalties if a participant's ideas are incorporated into products.

iStockphoto.com allows amateur and professional photographers, illustrators, and videographers to upload their work and earn royalties when their images are bought and downloaded. The company was acquired for $50 million by Getty Images.

Threadless.com lets online members submit T-shirt designs and vote on which ones should be produced.

Specialized Crowdsourcing Examples wiki: "Anjali Ramachandran, a strategist at London-based digital agency Made by Many, posted a wiki with 135 companies currently engaging in some form of crowdsourcing. It's a great start, and Anjali is asking us all to help expand it. Such efforts are crucial to the maturation and understanding of crowdsourcing." [7]

Case Studies

Proctor & Gamble

"During a 2002 Proctor & Gamble brainstorming session, a company manager had a flash of inspiration: Why not print text or images on Pringles potato chips? Great idea, but there was a catch: no one at P&G knew how to do it. To find the expertise it needed, P&G tapped into RTC North, a network of European scientists, and found a small bakery in Bologna, Italy, run by a professor who had invented a technology that uses ink-jet techniques to print pictures on pastries. By licensing the technology, P&G was able to launch the new Pringles Prints chips in less than a year—and at a fraction of the cost of doing it in-house. Indeed, after decades of rarely looking outside its own walls for ways to improve brands like Pringles and Crest, P&G now taps the brainpower of scientists around the world by using crowdsource research networks like Innocentive.com and YourEncore.com. The result: 40 percent of the company's new innovations now come from outside P&G, up from 10 percent in 2000."

O'Reilly Media

How do you know if your products receive adequate placement on store shelves? Executives at O'Reilly Media, a privately held company best known for publishing technical manuals, heard anecdotal stories that its books were difficult to find in big chain bookstores. Sending teams of market researchers from store to store would have been prohibitively expensive, so the company instead turned to an online user group devoted to its books. O'Reilly sent email to members of the group, soliciting volunteers to visit local booksellers and submit monthly reports of what titles were on the shelves. Some 500 people volunteered, and 75 of those happened to live near bookstores that were of particular interest to O'Reilly execs. For three months, the volunteers submitted spreadsheets to the company, along with anecdotal impressions of their experiences inside the stores. In return, O'Reilly gave the volunteers free books. "It answered our question: Are bookstore chains doing a decent job getting our books on the shelves?" says Sara Winge, O'Reilly spokeswoman. "Turns out, the stores were doing a pretty good job, but that was a very hard question to answer without having volunteers who were willing to actually go see for themselves."

Failures

Graham Hill:

"The first of these is Dell with its Ideastorm programme. Anyone can come up with a computer-related idea, post it on the Ideastorm website, vote for the best ideas, comment about them and hopefully, see them implemented. Sounds great. Why not harness ideas from customers? And why not get customers to vote for them to cut programme staff costs. Unfortunately, crowdsourcing has a number of serious problems. The first problem is that customers, even large numbers of them, typically produce average, unremarkable, incremental innovations, rather than the step-change innovations that companies hope for. Although 12,483 ideas have been posted on the website since Ideastorm started in February 2007, only 366 have been implemented to-date, a miserly 2.9% of the total. And most of the implemented ideas provide only incremental improvements to Dell's business. To its credit, Dell says that Ideastorm is intended as an extension of its relationship with its customers, rather than just as a source of product ideas. Just as well, as Ideastorm is a failure as a source of winning new innovations.

The second example is Starbucks with its My Starbucks Idea. Similar to Ideastorm, My Starbucks Idea allows any registered customer to post an idea, vote for the best ideas, comment on them and see them implemented. Or not as the case may be. My Starbucks Idea, despite receiving over 75,653 ideas, has only implemented 315 ideas to-date, an even more miserly 0.4% of the total. You wouldn't think that having ideas to improve a coffee-house chain would be all that difficult to implement. But the low rate of implementation illustrates the second problem with crowdsourcing; that customers have no idea of how the business works, what business capabilities it has and thus, no idea whether even the simplest of ideas can realistically be implemented, (let alone whether they will turn a profit)."
(http://www.customerthink.com/article/how_understanding_customer_jobs_turns_crowdsourcing_into_smartsourcing/)

Historical Precedents

Peter LaMotte:

"Without the ambitious innovation of the crowd, we wouldn’t have modern shipping, canned soup, or even margarine. Yes, each of these discoveries were made through bounties being cast to an open crowd in search of a solution.

Longitude

Means of figuring out longitude and latitude were easy enough in the 1700s, that was as long as you were on dry land. For ships at sea, on the other hand, it was nearly impossible, leading to thousands of lives lost in shipwrecks. Every great western nation in the 17th and 18th century offered
bounties for a solution to the problem from the Spanish King to the Dutch merchants.It took 150 years, but a crowdsourced solution was finally found, and one that really underscores the power of crowdsourcing itself. It came from a relatively uneducated English watchmaker by the name of John Harrison.

By allowing anyone to participate in solving the problem, a solution was found for a puzzle that had baffled some of the brightest minds in history (even Galileo!). In the end, it was found in someone who would never have been tapped to solve it to begin with.

Canning

While canning food may not seem as important as preventing the pre-industrial globe’s primary means of transportation from running aground, it may in fact be more important.
When Napoleon began his invasion of Europe in the 18th century he quickly ran into the problem of feeding his army once they left the safety and abundant food found on French farms. To solve the problem, he established a prize of 12,000 francs for the most innovative and effective means of staving off the troop’s hunger. After a few years of experimentation, Nicolas Appert submitted the winning solution: boiling wax sealed jars to preserve food from spoiling. Once again, it was due to the simple act of turning away from one team to a diverse collection of individuals to source the idea that would change modern food production.

Margarine

Canning food wasn’t the last time the Napoleon family would crowdsource a solution through a contest. When Napoleon III saw the appetite of his military and nation was surpassing production of butter, he once again set a prize for the first to develop a suitable supplement to replace this staple of the French diet.

Key Books to Read

Crowdsourcing: How the power of the crowd is driving the future of business. Jeff Howe. Random House, 2008.

Review:

"Crowdsourcing poses a profound challenge to the conventional notions of the structure of the firm as a fundamental economic unit. It suggests that the traditional demarcations between suppliers, contractors, employees, distributors and customers are breaking down.